San Francisco - Facebook Inc aims to raise about $10.6bn in Silicon
Valley's largest IPO, dwarfing the coming-out parties of tech companies
like Google Inc and granting the world's largest social network a market
value close to Amazon.com's.
The eight-year-old social network
that began as Mark Zuckerberg's Harvard dorm room project indicated an
initial public offering price range of between $28 and $35 a share on
Thursday, which would value the company at $77bn to $96bn.
size of the IPO reflects the company's growth and bullish expectations
about its money-making potential as a hub for everything from
advertising to commerce.
"We certainly haven't ever seen a tech
IPO on this grandiose a scale," said Lise Buyer, a principal with the
IPO advisory firm Class V Group.
Buyer, who worked on Google's
2004 IPO, said the question about a company "that's already this big and
that is raising this much money is how many of the glory days of growth
are in the past versus how many are ahead".
stands to raise as much as $12bn at the upper end of its planned range.
If an over-allotment or "greenshoe" option is triggered, the company
could sweep up a maximum of $13.6bn, according to a prospectus.
is only getting about half, or $5.6bn, of the estimated $10.6bn that it
would raise at the midpoint of its planned IPO range. About $4.9bn will
go to some existing shareholders.
Facebook's stock could begin
trading as soon as May 18, according to a road show schedule obtained by
Reuters. The offering's price range can be adjusted depending on Wall
Street's response during the road show.
Investors are expected to
flock to the highly anticipated IPO, although there have been growing
concerns about the social network's longer-term growth and Zuckerberg's
Facebook will trade at 13 to 16 times the
revenue that GreenCrest Capital analyst Max Wolff believes it will
generate this year. By comparison, Google, the world's dominant internet
search engine, currently trades at 5.5 to 6 times expected 2012
revenue, he said.
Google's valuation was higher when it went
public in 2004, though Facebook's IPO valuation is still higher than
Google's was back then, Wolff noted.
But some observers said the rich premium was unlikely to deter investors.
are going to be very comfortable with this valuation," said Sam
Schwerin of Millennium Technology Value Partners, which owns Facebook
shares worth roughly $200m. The firm is not selling in the IPO.
price range of $28 to $35 will be a relief to some people who are
concerned that they may try to take the highest possible price because
of high demand," he said.
"The amount being raised is noteworthy. Selling stockholders are raising about $5 billion in the IPO, which is a lot."